Corporate restructuring : does damage to institutional trust affect employee engagement?

Abstract

As a result of global competitiveness and a continuously changing business environment, organisations are constantly seeking for ways and means to enhance their profitability. The current organisational trend for businesses to gain competitive advantage is to restructure them to leaner and more flexible organisations. Businesses are striving to increase shareholder value by increasing performance through corporate restructuring to obtain an increase in efficiency and production. Unfortunately restructuring affects employees and could result in uncertainty with potential side effects in the work environment that could influence the employees‘ trust within the organisation. Damage to institutional trust, or trustworthiness as perceived by employees, could affect how employees engage within the organisation and impact on the profitability of such an organisation. A quantitative research study was conducted to determine if corporate restructuring affects institutional trust. It also investigated the relationship between institutional trust and employee engagement to determine if corporate restructuring affects employee engagement. The main findings of the research are that corporate restructuring has a profound impact on institutional trust and that damage to institutional trust affects how employees engage within the organisation.